HSBC, EuropeÔÇÖs largest bank, is in advanced talks with Chinese firm Industrial Securities over a joint banking venture that could be formed as early as this year.
The bank, which is also ChinaÔÇÖs biggest foreign lender, already owns stakes in two Chinese lenders and a fund venture; it is also planning to commence an insurance venture in the country.
Industrial Securities provides a range of services in China, including broking, advisory and underwriting. ChinaÔÇÖs underwriting and advisory markets are known to be particularly lucrative.
HSBC would be seeking management rights to the new entity, according to a report in the Hong Kong newspaper Apple Daily. However, China has capped the stake foreign banks can have in Chinese brokerage ventures at 33 per cent, making the awarding of management control to overseas firms less likely.
Unusually, however, foreign companies UBS and Goldman Sachs were awarded management control when setting up their brokerage joint ventures.
A Chinese ban on new joint ventures was only lifted in December; since then, regulatory approvals have been made for the likes of Credit Suisse and Deutsche Bank.
Citigroup and Morgan Stanley are currently awaiting approval for their projects in the country.
Australian Macquarie Group and South Korean Samsung Securities are also finalising plans to embark on similar ventures.
Around $3 billion of HSBCÔÇÖs first half, pre-tax earnings were made from China, equating to roughly 25 per cent.
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